While the Nikkei Average recovered to the 70,000 level for the first time in about three months, driven by AI stocks, the risk of a broad-based sell-off is also being watched amid concerns over a renewed European debt crisis.
Last week, the Nikkei Stock Average rose on the strength of AI stocks, reaching the 70,000 level for the first time in about three months. At the same time, views spread that a renewed European debt crisis, signaled by rising long-term government bond yields mainly in France, could weigh on the market.
This week, the release of the US FOMC minutes and interim earnings announcements from companies with February year-ends are among the key events. Japanese stocks are expected to remain firm on developments related to the weaker yen and retail and price hikes, although attention is warranted on the direction of long-term interest rates.
As for this week's market trends, gains in stocks serving AI data centers are expected to continue, while a broad-based sell-off could occur depending on concerns over European fiscal conditions and the direction of US long-term interest rates. This could also affect the performance of cyclical stocks outside the AI sector.
Among individual stocks, Furukawa Electric surged 15.8% from the previous week, while Nidec fell sharply, down 25.5% from the previous week amid reports of the president's dismissal and other developments. Micron has edged lower despite strong earnings.